EXHIBIT 3. ARTICLES AND BYLAWS

(STATE SEAL) ARTICLES OF INCORPORATION
STATE FORM 4159 (R 12/1-03) APPROVED BY STATE BOARD OF ACCOUNTS, 2003

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I.C. 23-1-21-2
Filing Fee $90.00

Todd Rokita
Secretary of State
Corporations Division
302 W. Washington Street, Room E018
Indianapolis, Indiana 46204
Telephone: 317/232-6576

ARTICLES OF INCORPORATION

The undersigned, desiring to form a corporation (hereinafter referred to as
"Corporation") pursuant to the provisions of:

XX Indiana Business Corporation Law
- -----

- ----- Indiana Professional Corporation Act 1983, Indiana Code 23-1.5-1-1, et
seq. (Professional corporations must include Certificate of Registration.)

As amended, executes the following Articles of Incorporation:

ARTICLE I - NAME AND PRINCIPAL OFFICE

Name of Corporation (the name must include the word "Corporation,"
"Incorporated," "Limited," "Company" or an abbreviation thereof.)
ALANAR REAL ESTATE INVESTMENT TRUST SERIES 1 CORPORATION

Principal Office: the address of the principal office of the Corporation is:

Post Office Address City State Zip Code
- ------------------- ---- ----- --------

101 South Main Street Sullivan IN 47882

ARTICLE II - REGISTERED OFFICE AND AGENT

Registered Agent: The name and street address of the Corporation's Registered
Agent and Registered Office for service of process are:

Name of Registered Agent James A. Klimek, Esq.

Address of Registered Office (street or building) City State Zip Code
- ------------------------------------------------- ---- ----- --------

1700 One American Square Box 82053 Indianapolis IN 46282

ARTICLE III - AUTHORIZED SHARES

Number of shares the Corporation is authorized to issue: 5,000,000. If there is
more than one class of shares, shares with rights and preferences, list such
information as "Exhibit A."

ARTICLE IV - INCORPORATORS
[THE NAME(S) AND ADDRESS(ES) OF THE INCORPORATORS OF THE CORPORATION]

Name Number and Street or Building City State Zip Code
- ---- ----------------------------- ---- ----- --------

James A. Klimek, Esq. 1700 One American Square Indianapolis IN 46282

- ---------------------------------------------------------------------------------------------------------

In Witness Whereof, the undersigned being all the incorporators of said
Corporation execute these Articles of Incorporation and verify, subject to
penalties of perjury, that the statements contained herein are true this 3rd day
of July, 2003.

Signature Printed Name

/s/ James A. Klimek, Esq.
- ------------------------------------------------ ------------------------

Signature Printed Name

- ------------------------------------------------ ------------------------

Signature Printed Name

- ------------------------------------------------ ------------------------

This instrument was prepared by: (name)
James A. Klimek, Esq.

Address (number, street, city and state) Zip Code
1700 One American Sq., Box 82053, Indianapolis, IN 46282

BYLAWS

ALANAR REAL ESTATE INVESTMENT TRUST SERIES 1 CORPORATION

BYLAW 1
DEFINITIONS

1.01. Definitions. For purposes of these Bylaws:

(a) "Acquisition Expenses" means expenses including but not limited to legal
fees and expenses, travel and communications expenses, costs of appraisals,
nonrefundable option payments on property not acquired, accounting fees and
expenses, title insurance, and miscellaneous expenses related to selection and
acquisition of properties, whether or not acquired.

(b) "Acquisition Fee" means the total of all fees and commissions paid by any
party in connection with making or investing in mortgage loans or the purchase,
development or construction of property by a Company. Included in the
computation of such fees or commissions shall be any real estate commission,
selection fee, Development Fee, nonrecurring management fee, loan fees or points
or any fee of a similar nature, however designated. Excluded shall be
Development Fees and Construction Fees paid to Persons not affiliated with the
Sponsor in connection with the actual development and construction of a project.

(d) "Advisor" means the person responsible for directing or performing the
day-to-day business affairs of the Company, Including a person to which an
Advisor subcontracts substantially all such functions

(e) "Affiliate" means:

(i) Any person who directly or indirectly controlling, is controlled by
or under common control with any other person;

(ii) Any person owning or controlling 10% or more of the outstanding
voting securities or beneficial interests of such other person;

(iii) Any officer, director or trustee of, or general partner of, such
person;

(iv) If such other person or trustee, or general partner of another
entity, then the entity for which that person acts in any such capacity;
and

(v) Any person otherwise having a material business or professional
relationship with such person.

(f) "Average Invested Assets" means for any period the average of the aggregate
book value of the assets of the Company invested, directly or indirectly, in
equity interests in and loans secured by real estate, before reserves for
depreciation or bad debts or other similar non-cash reserves computed by taking
the average of such values at the end of each month during such period.

(g) "Beneficial Ownership" means ownership of shares by a Person (whether or
not treated as an individual for purposes of Section 544 of the Code) who is the
direct owner of such shares or would be treated as the owner of such shares
either directly or Constructively through the application of Section 544 of the
Code, as modified by Section 856(h)(1)(B) of the Code. "Beneficial Owner,"
"Beneficially Owns," "Beneficially Own," and "Beneficially Owned" have
correlative meanings

(h) "Board," "Board of Directors," and "Directors," mean the board of directors
designated by Bylaw 4.

(i) "Code" means the Internal Revenue Code of 1986, as amended.

(j) "Competitive Real Estate Commission" means real estate or brokerage
commission paid for the purchase or sale of a property which is reasonable,
customary and competitive in light of the size, type and location of such
property.

(k) "Construction Fee" means a fee or other remuneration for acting as general
contractor or construction manager to construct improvements, supervise and
coordinate projects or to provide Major Repairs or Rehabilitation on a Company's
property.

(l) "Constructive Ownership" means ownership of shares by a Person who would be
treated as an owner of such shares, either directly or Constructively, through
the application of Section 318 of the Code, as modified by Section 856(d)(5) of
the Code. The terms "Constructive Owner," "Constructively Owns," "Constructively
Owning" and "Constructively Owned" shall have correlative meanings.

(m) "Development Fee" means a fee for the packaging of the Company's property,
including negotiating and approving plans and undertaking to assist in obtaining
zoning and necessary variances and necessary financing for the specific
property, either initially or at a later date.

(n) "Employees' Security Company" means an investment company or similar issuer
all of the outstanding securities of which (other than short-term paper) are
beneficially owned.

(i) By the employees or persons on retainer of a single employer or two
or more employers each of which is an affiliated company of the other;

(ii) By former employees of such employers;

(iii) By members of the immediate family of such employees, persons on
retainer, or former employees;

(iv) By any two or more of the classes of Persons set out in Bylaw
1.01(k)(i)-(iii); or

(v) By such employer or employers together with any one or more of the
classes of Persons set out in Bylaw 1.01(k)(i)-(iii).

(o) "Government Security" means any security issued or guaranteed as to
principal or interest by the United States, or by a Person controlled or
supervised by and acting as an instrumentality of the Government of the United
States pursuant to authority granted by the Congress of the United States; or
any certificate of deposit for any of the foregoing.

(p) "Independent Expert" means a Person with no material current or prior
business or personal relationship with the Advisor or Directors who is engaged
to a substantial extent in the business of rendering opinions regarding the
value of assets of the type held by the Company.

(q) "Initial Investment" means that portion of the initial capitalization of
the Company contributed by the Sponsor or its Affiliates pursuant to Bylaw
8.10(a).

(r) "Independent Directors" means Directors of the Company who are not
Affiliates, directly or indirectly, of a Management Company or the Company. A
Director shall not be considered independent if he is serving as a director for
more than three real estate investment trusts organized by a Sponsor of the
Company. Independent Directors shall also mean those who perform no other
services for the Company, except as Directors. An indirect relationship shall
include circumstances in which a member of the immediate family of a Director
has one of the foregoing relationships with a Management Company or the Company
or entity for which he serves as Director.

(s) "Investment Securities" means all securities except:

(i) Government Securities;

(ii) Securities issued by Employees' Securities Companies; and

(iii) Securities issued by majority-owned subsidiaries of the owner which:

(A) Are not investment companies; and

(B) Are not relying on the exception from the definition of
investment company in paragraph (i) or (7) of Section 3(c) of the
Investment Company Act of 1940, as amended.

(t) "Management Company" means an entity responsible for performing leasing and
customary management services with respect to properties of the Company,
including a person or entity to which a Management Company subcontracts
substantially all of such functions.

(u) "Net Assets" means the total assets (other than intangibles) at cost before
deducting depreciation or other non-cash reserves less total liabilities,
calculated at least quarterly on a basis consistently applied.

(v) "Net Income" means for any period total revenues applicable to such period
other than additions to reserves for depreciation or bad debts or other similar
non-cash reserves. If the Advisor receives an incentive fee, Net Income, for
purposes of calculating Total Operating Expenses in Bylaw 9.02 shall exclude the
gain from the sale of the Company's assets.

(w) "Organization and Offering Expenses" means all expenses incurred by and
paid from the assets of the Company in connection with and in preparing the
Company for registration and subsequently offering and distributing it to the
public, including, but not limited to, total underwriting and brokerage
discounts and commissions (including fees of the underwriter's attorneys),
expenses for printing, engraving, mailing, salaries of employees while engaged
in sales activity, charges of transfer agents, registrars, trustees, escrow
holders, depositaries, experts, expenses of qualification of the sale of
securities under Federal and State laws, including taxes and fees, accountants'
and attorneys' fees.

(x) "Ownership Limit," initially means 9.8%, in number of shares or value, of
the outstanding shares and, after any adjustment contemplated by Bylaw 10.07,
shall mean such lesser or greater percentage of the outstanding shares as so
adjusted. The number and value of the outstanding shares shall be determined by
the Board in good faith, which determination shall be conclusive.

(y) "Person" means any natural person, partnership, corporation, association,
trust, limited liability company or other legal entity.

(z) "Shareholder List" means an alphabetical list of the names, addresses and
telephone numbers of the shareholders of the Company along with the number of
shares held by each of them.

(aa) "Sponsor" means any person directly or indirectly instrumental in
organizing wholly or in part a real estate investment trust, and any Affiliate
of any such person, but does not include a person whose only relationship with
the Company is that of an independent property manager and whose only
compensation is as such. Sponsor also does not include wholly independent third
parties such as attorneys, accountants and underwriters whose only compensation
is for professional services.

(bb) "Total Operating Expenses" means aggregate expenses of every character paid
or

incurred by the Company as determined under generally accepted accounting,
including Advisor's fees, but excluding:

(i) The expenses of raising capital such as Organization and Offering
Expenses, legal, audit, accounting, underwriting, brokerage, listing,
registration and other fees, printing and other such expenses, and tax
incurred connection with the issuance, distribution, transfer, registration
and stock exchange listing of the Company's shares;

(ii) Interest payments;

(iii) Taxes;

(iv) Non-cash expenditures such as depreciation, amortization and bad debt
reserves;

(v) Incentive fees paid in compliance with Bylaw 9.04, notwithstanding
Bylaw 1.01(aa)(vi);

(vi) Acquisition Fees, Acquisition Expenses, real estate commissions on
resale of property and other expenses connected with the acquisition,
disposition, and ownership of real estate interests, mortgage loans, or
other property, (such as the costs of foreclosure, insurance premiums,
legal services, maintenance, repair and improvement of property).

(cc) "Transfer" means a sale, transfer, gift, assignment, devise or other
disposition of shares, whether voluntary or involuntary, whether of record,
Constructively or Beneficially and whether by operation of law or otherwise,
including:

(i) The granting of any option or entering into any agreement for the
sale, transfer or other disposition of shares;

(ii) The sale, transfer, assignment or other disposition of any securities
or rights convertible into or exchangeable for shares, debt or any security
of the Company for shares; and

(iii) Any transfer or other disposition of any interest in shares as a
result of a change in the marital status of the holder of such share.

(dd) "Unimproved Real Property" means property of the Company which has the
following characteristics:

(i) Property in which the Company owns an equity interest but which was
not acquired for the purpose of producing rental or other operating income;

(ii) Property on which no development or construction is in process; and

(iii) Property with respect to which no development or construction is in
process.

BYLAW 2
OFFICES

2.01. Offices. Alanar Real Estate Investment Trust Series 1 Corporation, an
Indiana corporation, (the "Company") shall have its registered office in the
State of Indiana and may have such other offices and places of business within
or without the State of Indiana as the Board may from time to time determine or
the business of the Company may require.

BYLAW 3
SHAREHOLDERS

3.01. Place of Meetings. Meetings of shareholders for any purpose may be
held at such place or places, either within or without the State of Indiana, as
shall be designated by the Board, or by the president of the Company with
respect to shareholder meetings called by him.

3.02. Annual Meeting. There shall be an annual meeting of the shareholders
of the Company upon reasonable notice and within a reasonable period (not less
than 30 days) following delivery of the annual report. The Directors, including
the Independent Directors, shall take reasonable steps to insure that such
notice and meeting take place. At such meeting, the shareholders shall elect the
Board and transact such other business as may properly come before the Board.

3.03. Special Meetings. Special meetings of the shareholders may be called
by the President, by a majority of the Directors, and shall be called by an
officer of the Company upon written request, either in person or be mail, of a
meeting and the purpose of such meeting to be held on a date not less than
fifteen nor more than sixty days after the distribution of such notice, at a
time and place specified in the request, or if none is specified, at a time and
place convenient to shareholders.

3.04. Quorum. At all meetings of shareholders, the holders of a majority of
share issued and outstanding and entitled to vote at such meeting, present in
person or represented by proxy, shall constitute a quorum for the transaction of
business, except as otherwise by statute or these Bylaws. When a quorum is
present is once present to organize a meeting, it is not broken by the
subsequent withdrawal of any shareholder.

3.05. Conduct of Meeting. Such person as the Board may designate or, in the
absence of such person, the highest ranking officer of the Company who is
present shall call to order any meeting of the stockholders and act as chairman
of the meeting. In the absence of the secretary of the Company, the secretary of
the meeting shall be such person as the chairman appoints. The chairman of any
meeting of the shareholders shall determine the order of business and the
procedure at the meeting, including such regulations of the manner of voting and
the conduct of discussion as seems to him in order.

3.06. Voting. Voting shall be conducted as follows:

(a) At all meetings of shareholders, each shareholder having the right to
vote at such meeting may vote in person or by proxy, and, unless otherwise
provided in the articles of incorporation of the Company or in any
resolution providing for the issuance of any class or series of stock
adopted by the Board, shall have one vote for each share of stock
registered in his name. Election of Directors shall be by written ballot.

(b) When a quorum is once present at any meeting of shareholders, a
majority of the votes cast, whether in person or represented by proxy,
shall decide any question or proposed action brought before such meeting,
except for the election of directors, who shall be elected by a plurality
of the votes cast, or unless the question of action is one upon which a
different vote is required by express provision of statute, in which case
such provision shall govern the vote on the decision of such question or
action.

3.07. Adjourned Meetings. Any meeting of shareholders may be adjourned to a
designated time and place by a vote of a majority in interest of the
shareholders present in person or by proxy and entitled to vote, even though
less than a quorum is present, or by the chairman of the meeting if a quorum of
shareholders is not present. No notice of such adjourned meeting need be given,
other than by announcement at the meeting at which adjournment is taken of the
time and place to which such meeting is adjourned, and any business may be
transacted at the adjourned meeting which might have been transacted at the
meeting as originally called. However, if a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at such meeting.

3.08. Action by Written Consent of Shareholders. Except as otherwise
provided in these Bylaws with respect to election of directors or by applicable
law, any action of the shareholders required or permitted to be taken at any
regular or special meeting of shareholders may be taken without any such
meeting, notice of meeting or vote if a consent in writing setting out the
action to be taken by such consent is signed by the holders of outstanding
shares having not fewer than the number of votes that would have been necessary
to authorize such action at a meeting at which all shares entitled to vote were
present and voted. Prompt notice of the taking of any such action shall be given
to any shareholders entitled to vote who have not so consented in writing.

3.09. Shareholders of Record. Shareholder record dates shall be determined
as follows:

(a) The shareholders from time to time entitled to notice of or vote at
any meeting of shareholders or any adjournment of such meeting, or to
express consent to any corporate action without a meeting, or entitled to
receive payment of any distribution or allotment of any rights, or entitled
to exercise any rights with respect to any change, conversion or exchange
of shares, or for the purpose of any lawful action, shall be the
shareholders of record as of the close of business on a date fixed in
advance by the Board as the record date for any such purpose. Such a record
date shall not be more than sixty (60) days nor fewer than ten (10) days
before the date of such meeting, nor more than sixty (60) days prior to any
other such action without a meeting.

(b) If the Board does not fix a record date:

(i) The record date for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders shall be as of the
close of business on the day next preceding the day on which notice of
such meeting is given, or, if no notice is given, the day next
preceding the day on which the meeting is held; and

(ii) The record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the
resolution of the Board relating to such person is adopted.

3.10. Shares Sold in a Private Offering. The voting rights per share of
equity securities of the Company (other than the publicly held equity securities
of the Company) sold in a private offering shall not exceed voting rights which
bear the same relationship to the voting rights of the publicly held shares of
the Company as the consideration paid to the Company for each privately offered
equity security bears to the book value of each outstanding publicly held share.

3.11. Powers of Shareholders. The holders of a majority of the then
outstanding shares may, without the necessity for concurrence by the Directors,
vote to:

(a) Amend these Bylaws;

(b) Terminate the Company; and

3.12. Limitations on Voting of Shares. With respect to shares owned by the
Advisor, the Directors or any Affiliate, neither the Advisor, nor the Trustees,
nor any Affiliate may vote or consent on matters submitted to the shareholders
regarding the removal of the Advisor, Directors or any Affiliate or any
transaction between the Company and any of them. In determining the requisite
percentage in interest of shares necessary to approve a matter on which the
Advisor, Directors and any Affiliate may not vote or consent, any shares owned
by any of them shall not be included.

3.13. Liability of Shareholders. The shareholders of the company shall be
protected from liability as follows:

(a) The shares of the Company shall be non-assessable by the Company.

(b) The shareholders of the Company shall not be personally liable on
account of any contractual obligations undertaken by the Company.

3.14. Reports. The Company shall cause to be prepared and mailed or
delivered to each shareholder as of a record date after the end of the fiscal
year and each holder of other publicly held securities of the Company within 120
days after the end of the fiscal year to which it relates an

annual report for each fiscal year ending after the initial public offering of
its securities which shall include:

(a) Financial statements prepared in accordance with generally accepted
accounting principles which are audited and reported by independent
certified public accountants;

(b) The ratio of the costs of raising capital during the period to the
capital raised;

(c) The aggregate amount of advisory fees and the aggregate amount of
other fees paid to the Advisor and any Affiliate of the Advisor by the
Company and including fees or charges paid to the Advisor and any affiliate
of the Advisor by third parties doing business with the Company;

(d) The Total Operating Expenses of the Company stated as a percentage of
Average Invested Assets and as a percentage of its Net Income;

(e) A report from the Independent Trustees that the policies being
followed by the Company are in the best interests of its shareholders and
the basis for such determination; and

(f) Separately stated, full disclosure of all material terms, factors and
circumstances surrounding any and all transactions including the Company,
Directors, Advisor, Sponsor and any Affiliate of such Persons occurring in
the year for which the annual report is made. Independent Directors shall
be specifically charged with a duty to examine and comment in the report on
the fairness of such transactions.

3.15. Access to Records. Any shareholder and any designation representative
of a shareholder shall be permitted access to all records of the Company at all
reasonable times, and may inspect and copy any of them for any reasonable
purpose. Inspection of the books and records of the Company by the Administrator
shall be provided upon reasonable notice and during normal business hours. With
regard to access to the list of shareholders of the Company, the following shall
apply:

(a) The Shareholder List shall be maintained as part of the books and
records of the Company and shall be available for inspection by any
shareholder or a shareholder's designated agent at the home office of the
Company.

(b) The Shareholder List shall be updated at least quarterly.

(c) A copy of the Shareholder List shall be mailed to any shareholder
requesting the Shareholder List within ten days of the request. Such copy
shall be printed in alphabetical order, on white paper, and in a readily
readable type size (in no event smaller than 10-point type). A reasonable
charge for copy work may be charged by the Company.

(d) The purposes for which a shareholder may request a copy of the
Shareholder List include, without limitation, matters relating to
shareholders' voting, and the exercise of

shareholders' voting rights under federal proxy laws.

(e) If the Advisor or Directors of the Company neglects or refuses to
exhibit, produce or mail a copy of the Shareholder List as requested, the
Advisor and the Directors shall be liable to any shareholder requesting the
list for the costs, including attorneys' fees, incurred by that shareholder
for compelling the production of the Shareholder List, and for actual
damages suffered by any shareholder by reason of such refusal or neglect.
It shall be a defense that the actual purpose and reason for the requests
for inspection or for a copy of the Shareholder List is to secure such list
of shareholders or other information for the purpose of selling such list
or copies thereafter of, or of using the same for a commercial purpose
other than in the interest of the applicant as a shareholder relative to
the affairs of the Company. The Company may require the shareholder
requesting the Shareholder List to represent that the list is not requested
for a commercial purpose unrelated to the shareholder's interest in the
Company. The remedies provided by this Bylaw 3.15(e) to shareholders
requesting copies of the Shareholder List are in addition to, and shall not
in any way limit, other remedies available to shareholders under federal
law or the laws of any state.

3.16. Income and Net Worth. With regard to the income and net worth of
shareholders, the following shall apply:

(a) Shareholders shall have:

(i) A minimum annual gross income of $45,000 and a minimum net worth
of $45,000; or

(ii) A minimum net worth of $150,000.

(b) For purposes of Bylaw 3.16(a), net worth shall be determined exclusive
of home, home furnishings and automobiles.

(c) In the case of sales to fiduciary accounts, these minimum standards
shall be met by the beneficiary, the fiduciary account, or by the donor or
grantor who directly or indirectly supplies the funds to purchase the
shares if the donor or grantor is the fiduciary.

3.17. Determination that Sale to Shareholder is Suitable and Appropriate.
The following shall apply to the suitability and appropriateness of shares for
shareholders:

(a) The Sponsor and each Person selling shares on behalf of the Sponsor or
the Company shall make every reasonable effort to determine that the
purchase of shares is a suitable and appropriate investment for each
shareholder.

(b) In making this determination, the Sponsor or each Person selling
shares on behalf of the Sponsor or Company shall:

(i) Meet the minimum income and net worth standards established in
Bylaw 3.16(a);

(ii) Can reasonably benefit from the Company based on the prospective
shareholder's overall investment objectives and portfolio structure;

(iii) Is able to bear the economic risk of the investment based on the
prospective shareholder's overall financial situation; and

(iv) Has apparent understanding of:

(A) The fundamental risks of the investment;

(B) The risk that the Shareholder may lose the entire
investment;

(D) The background and qualifications of the Sponsor and
Advisor; and

(E) The tax consequences of the investment.

(c) The Sponsor or each Person selling shares on behalf of the Sponsor or
the Company will make this determination on the basis of information it has
obtained from a prospective shareholder. Relevant information for this
purpose will include at least the age, investment objectives, investment
experience, income, net worth, financial situation and other investments of
the prospective shareholder, as well as any other pertinent factors.

(d) The Sponsor or each Person selling shares on behalf of the Sponsor or
the Company shall maintain records of the information used to determine
that an investment in shares is suitable and appropriate for a shareholder.
The Sponsor or each Person selling shares on behalf of the Company shall
maintain these records for at least six years.

BYLAW 4
DIRECTORS

4.01. Board. The management of the affairs, property and business of the
Company shall be vested in the Board, the members of which need not be
shareholders. In addition to the power and authority expressly conferred upon it
by these Bylaws, the Board may take any action and do all such lawful acts and
things on behalf of the Company as are not be statute or these Bylaws required
to be taken or done by the shareholders.

4.02. Number and Election. The following provisions shall apply to the
Directors:

(a) The Company shall have a minimum of three Directors, each of whom
(other than a Director elected to fill the unexpired term of another
Director) is elected by the shareholders of the Company and who shall serve
a term of one year.

(b) Nothing in this Bylaw 4.02. shall prohibit a Director from being
re-elected by the

shareholders of the Company.

(d) Independent Directors shall nominate replacements for vacancies
amongst the Independent Directors' positions.

(e) The Directors may establish such committees they deem appropriate
(provided the majority of the members of each committee are Independent
Directors).

4.03. Duties of Directors. The Directors shall have the following duties:

(a) At, or before, the first meeting of the Directors, the articles of
incorporation of the Company and these bylaws shall be reviewed and
ratified by a majority vote of the Directors and of the Independent
Directors.

(b) The Directors shall establish written policies on investments and
borrowing and shall monitor the administrative procedures, investment
operations and performance of the Company and the Advisor to assure that
such policies are carried out.

(c) A majority of the Independent Directors must approve matters to which
this Bylaw 4.03 and Bylaws 3.02, 3.03, 3.11, 4.05, 4.06, 4.07, 4.21, 4.22,
4.23, 7.08, 8.01(g), 8.10, 8.11, 9.01, 9.02, 9.03 and 9.04.

(d) The Directors, including the Independent Directors, shall be required
to take reasonable steps to insure that the requirements of Bylaw 3.14.,
concerning reports to shareholders, are met.

4.04. Experience of Directors. A Director shall have at least three years
of relevant experience demonstrating the knowledge and experience required to
successfully acquire and manage the type of assets being acquired by the
Company. At least one of the Independent Directors shall have three years of
actual direct experience in acquiring or managing the type of real estate to be
acquired by the Company for his or her own account or as an agent.

4.05. Fiduciary Duty. The Directors and Advisor shall be deemed to be in a
fiduciary relationship to the Company and its shareholders. The Directors shall
also have a fiduciary duty to the shareholders to supervise the relationship of
the Company with the Advisor.

4.06. Advisory Contract. The following provisions shall apply to the
advisory contract of the Company:

(a) It shall be the duty of the Directors to evaluate the performance of
the Advisor before entering into or renewing an advisory contract. The
criteria used in such evaluation shall be reflected in the minutes of such
meeting.

(b) Each contract for the services of an Advisor entered into by the
Directors shall have

a term of no more than one year.

(c) Each advisory contract shall be terminable by a majority of the
Independent Directors, or the Advisor on sixty (60) days written notice
without cause or penalty. In the event of the termination of such contract,
the Advisor will cooperate with the Company and take all reasonable steps
requested to assist the Directors in making an orderly transition of the
advisory function.

(d) The qualifications of the Advisor shall be set out in the prospectus
relating the initial public offering of the shares of the Company and the
Directors shall determine that any successor Advisor possesses sufficient
qualifications to:

(i) Perform the advisory function for the Company; and

(ii) Justify the compensation provided for in its contract with the
Company.

4.07. Liability and Indemnification. The Company shall follow the following
liability and indemnification provisions:

(a) The Company shall not provide for indemnification of the Directors,
Advisors or Affiliates for any liability or loss suffered by the Directors,
Advisor or Affiliates, nor shall it provide that Directors, Advisors or
Affiliates be held harmless for any loss or liability suffered by the
Company, unless all the following conditions are met:

(i) The Directors, Advisor or Affiliates have determined, in good
faith, that the course of conduct which caused the loss or liability
was in the best interests of the Company;

(ii) The Directors, Advisor or Affiliates were acting on behalf of or
performing services for the Company;

(iii) Such liability or loss was not the result of:

(A) Negligence or misconduct by the Directors, excluding the
Independent Trustees, Advisors or Affiliates; or

(B) Gross negligence or willful misconduct by the Independent
Directors.

(b) Notwithstanding anything to the contrary contained in Bylaw 4.07(a),
the Directors, Advisor or Affiliates and any persons acting as a
broker-dealer shall not be indemnified by the Company for any losses,
liabilities or expenses arising from or out of an alleged violation of
federal or state securities laws by such party unless one or more of the
following conditions are met:

(i) There has been a successful adjudication on the merits on each
count involving alleged securities law violations as to the particular
indemnitee;

(ii) Such claims have been dismissed with prejudice on the merits by
a court of competent jurisdiction as to the particular indemnitee;
and

(iii) A court of compete jurisdiction approves a settlement of the
claims against a particular indemnitee and finds that indemnification
of the settlement and the related costs should be made, and the court
considering the request for indemnification has been advised of the
position of the Securities and Exchange Commission and of the
published position of any state securities regulatory authority in
which securities of the Company were offered and sold as to
indemnification for violation of securities laws.

(c) The advancement of Company funds to the Directors, Advisors or
Affiliates for legal expenses and other costs incurred as a result of any
legal action for which indemnification is being sought is permissible only
if all the following conditions are satisfied:

(i) The legal action relates to acts or omissions with respect to
the performance of duties or services on behalf of the Company;

(ii) The legal action is initiated by a third party who is not a
shareholder of the Company or the legal action is initiated by a
shareholder of the Company acting in this or her capacity as such and
a court of competent jurisdiction specifically approves such
advancement.

(iii) The Directors, Advisor or Affiliates undertake to repay the
advanced funds to the Company, together with the applicable legal rate
of interest thereon, in cases in which such Directors, Advisors or
Affiliates are found not to be entitled to indemnification.

4.08. Annual and Regular Meetings. The annual meeting of the Board shall be
held promptly after the annual meeting of shareholders, and regular meetings of
the Board may be held at such times as the Board may from time to time
determine. No notice shall be required for the annual or any regular meeting of
the Board.

4.09. Special Meetings. Special meetings of the Board may be called by the
President, by an officer of the Company who is also a director, or by any two
(2) directors, upon three (3) day's notice to each director either personally or
by mail, telephone, or telefax, and if by telephone or telefax confirmed in
writing before, at or after the meeting, setting out the time and place of such
meeting. Notice of any special meeting need not be given, however, to any
director who submits a signed waiver of notice, before or after the meeting, or
who attends the meeting without protesting prior to the conclusion of the
meeting the lack of notice of such meeting.

4.10. Place and Manner of Meetings. The place and manner of meetings of the
Board shall be as follows:

(a) The Board may hold its meetings, regular or special, at such places,
either within or

without the state of Indiana, as it may from time to time determine, or as
shall be set out in any notice of such meeting.

(b) Any meeting of the Board or any committee of the Board may be held by
conference telephone or similar communications equipment by which all
persons participating in the meeting can hear each other, and such
participation shall constitute presence at the meeting.

4.11. Adjourned Meetings. A majority of the directors present, whether or
not a quorum, may adjourn any meeting of the Board to another time and place.
Notice of such adjourned meeting need not be given if the time and place of such
adjourned meeting are announced at the meeting at which the adjournment is taken
and if adjournment does not exceed ten days in any one adjournment.

4.12. Quorum of Directors. A majority of the entire number of directors
shall constitute a quorum for the transaction of business, provided that with
respect to any question on which a majority of Independent Directors is required
for the approval of such question, a majority of the entire number of
Independent Directors shall constitute a quorum for the transaction of business
on such question. The entire number of directors means the number of directors
the Company would have if there were no vacancies on the Board.

4.13. Action of the Board. The vote of a majority of the directors present
at a meeting at which a quorum is present shall be the act of the Board, unless
the question or action is one upon which a different vote is required by express
provision of statute or these Bylaws, in which case such provision shall govern
the vote on the decision of such question or action. Each director present shall
have one vote.

4.14. Action by Written Consent of Directors. Any action required or
permitted to be taken at any meeting of the Board or any committee of the Board
may be taken without a meeting, if a written consent to such action is signed by
all members of the Board or of such committee, and such written consent is filed
with the minutes of proceedings of the Board or such committee.

4.15. Resignation. A director may resign at any time by giving written
notice to the Board, the President or the Secretary of the Company. Unless
otherwise specified in such notice, such resignation shall take effect upon
receipt by the Board or such officer, and the acceptance of such resignation
shall not be necessary to make it effective.

4.16. Newly Created Directorships and Vacancies. Newly created
directorships resulting from an increase in the number of directors or vacancies
occurring in the Board for any reason may be filled by a vote of the majority of
directors then in office, although fewer than a quorum, provided that the
Independent Directors shall nominate replacements for vacancies amongst the
Independent Directors' positions. A director elected to fill a newly created
directorship to fill any vacancy shall hold office until the next annual meeting
of shareholders, and until his successor, if any, has been elected and
qualified.

4.17. Chairman. At all meetings of the Board, the Chairman of the Board or,
if one has not been elected or appointed in his absence, a chairman chosen by
the directors present at such

meeting, shall preside.

4.18. Committees Appointed by the Board. The Board may, by resolution
passed by a majority of the entire Board or by written consent of all of the
directors, designate one or more committees, each committee to consist of one or
more of the directors, provided that if any applicable state or federal
securities law or regulations promulgated under such laws shall require that a
majority of such committee be composed of Independent Directors, the Board shall
take such action as shall be necessary to comply with such laws or regulations.
The Board may also designate one or more directors as alternate members of any
committee who may replace any absent or disqualified committee member at any
committee meeting. Any such committee, to the extent provided in the resolution,
except as restricted by law, shall have and may exercise the powers of the Board
in the management of the affairs, business and property of the Company, and may
authorize the seal of the Company to be affixed to all papers that may require
it.

4.19. Compensation. Directors who are not salaried employees of the Company
shall be paid ten thousand dollars ($10,000) per year and receive five hundred
dollars ($500) for attendance at any meeting of the Board or any committee of
the Board, except that such fees shall be payable only once if more than such
meeting is held the same day. Nothing contained in this Bylaw 4.19 shall be
construed to preclude any director from serving the Company in any other
capacity and receiving compensation for such service.

4.20. Limitations on Power of Board. Without concurrence of the holders of
a majority of the issued and outstanding shares, the Board may not:

(a) Amend these Bylaws, except for amendments which do not adversely
affect the rights, preferences and privileges of shareholders including
amendments to provisions relating to, Director qualifications, fiduciary
duty, liability and indemnification, conflicts of interest, investment
policies or investment restrictions;

(b) Sell all or substantially all of the Company's assets other than in
the ordinary course of business or in connection with liquidation and
dissolution;

(d) Dissolve or liquidate the Company, other than before the initial
investment in property.

4.21. Determination Regarding Fees and Expenses. The Independent Directors
shall determine, from time to time but at least annually, that the total fees
and expenses of the Company are reasonable in light of the investment
performance of the Company, its Net Assets, its Net Income and the fees and
expenses of other comparable unaffiliated real estate investment trusts. Each
such determination shall be reflected in the minutes of the meeting of the
Directors.

4.22. Advisor Compensation. The Independent Directors shall determine from
time to time and at least annually that the compensation which the Company
contracts to pay to the Advisor is reasonable in relation to the nature and
quality of services performed. The Independent Directors

shall also supervise the performance of the Advisor and the compensation paid to
it by the Company to determine that the provisions of such contract are being
carried out. Each such determination shall be based on the factors set out below
and all other factors the Independent Directors may deem relevant and the
findings of such Directors on each of such factors shall be recorded in the
minutes of the Directors:

(a) The size of the advisory fee in relation to the size, composition and
profitability of the portfolio of the Company.

(b) The success of the Advisor in generating opportunities that meet the
investment objectives of the Company.

(c) The rates charged by other real estate investment trusts and to
investors other than real estate investment trusts by advisors performing
similar services.

(d) Additional revenues realized by the Advisor and any Affiliate through
their relationship with the Company, including loan administration,
underwriting or broker commissions, servicing, engineering, inspection and
other fees, whether paid by the Company or by others with whom the Company
does business.

(e) The quality and extent of service and advice furnished by the Advisor.

(f) The performance of the investment portfolio of the Company, including
income, conservation or appreciation of capital, frequency of problem
investments and competence in dealing with distress situations.

(g) The quality of the portfolio of the Company in relationship to the
investments generated by the Advisor for its own account.

4.23. Statement of Objectives. The Independent Directors shall review the
investment policies of the Company with sufficient frequency and at least
annually to determine that the policies being followed by the Company at any
time are in the best interests of its shareholders. Each such determination and
the basis for such determination shall be set out in the minutes of the
Directors.

BYLAW 5
OFFICERS

5.01. Officers, Election and Term. Officers shall be elected and serve as
follows:

(a) At its annual meeting, the Board shall elect or appoint a Chairman of
the Board, a President, an Executive Vice-President, an Executive
Vice-President, a Secretary and a Treasurer and may, in addition elect or
appoint at any time such officers as it may determine. Any number of
offices may be held by the same person, provided that no officer shall
execute, acknowledge or verify any instrument in more than one capacity if
such instrument is required by law or these Bylaws to be executed,
acknowledged or verified by

two or more officers.

(b) Unless otherwise specified by the Board, each officer shall be elected
or appointed to hold office until the annual meeting of the Board next
following his election or appointment and until his successor, if any, has
been elected or appointed and qualified, or until his earlier resignation
or removal.

(c) Any officer may resign at any time by giving written notice to the
Board, the Chairman of the Board, the President or the Secretary of the
Corporation. Unless otherwise specified in such notice, such resignation
shall take effect upon receipt of such notice, and the acceptance of such
resignation shall not be necessary to make it effective.

(d) Any officer elected or appointed by the Board may be removed by the
Board with or without cause. Any vacancy occurring in any office by reason
of death, resignation, removal or otherwise may be filled by the Board.

5.02. Powers and Duties. The officers, agents and employees of the Company
shall each have such powers and perform such duties in the management of the
affairs, property and business of the Corporation, subject to the control of and
limitation by the Board, as generally pertain to their respective offices, as
well as such powers and duties as may be authorized from time to time by the
Board. Without limiting such general powers and duties, the following officers
shall have the following powers and duties:

(a) The Chairman of the Board shall be the Chief Executive Officer of the
Company. Subject to the provisions of these Bylaws and to the direction of
the Board, he shall have the responsibility for the general management and
control of the affairs and business of the Company and shall perform all
duties and have all powers which are commonly incident to the office of the
chief executive or which are delegated to him by the Board.

(b) The President shall be the Chief Operating Officer of the Company. He
shall perform all duties incident to the Chief Operating Officer, and such
other duties as from time to time may be assigned to him by the Board.

(c) The Executive Vice President shall be the next highest ranking officer
of the Company and shall perform all duties incident to such office, and
such other duties as from time to time may be assigned to him by the
President or the Board. In the absence or disability of the President, the
Executive Vice President shall perform the duties and exercise the powers
of the President.

(d) Each vice-president shall perform such duties as the Board shall
prescribe.

(e) The Treasurer shall be the Chief Financial Officer of the Company and
shall keep regular books of account. He shall make such disbursements of
the funds of the Company as are proper and shall render to the Board an
account of all such transactions and of the financial condition of the
Company as the Board may require.

(f) The Secretary shall issue all authorized notices for, and shall keep
minutes of, all meetings of the shareholders and the Board.

(g) The Board may from time to time delegate the powers or duties of any
officer to any other officer or agents, notwithstanding any provision of
this Bylaw 5.

5.03. Sureties and Bonds. If the Board shall so require, any officer, agent
or employee of the Company shall furnish the Company a bond in such sum and with
such surety or sureties as the Board may direct, conditioned upon the faithful
performance of his duties to the Company and including responsibility for
negligence and for the accounting for all property, funds or securities of the
Company which may come into his hands.

BYLAW 6
SHARES

6.01. Certificates. Shares of the Company shall be represented by
certificates, as provided by the Indiana Business Corporation Law. Such
certificates shall be numbered and entered into the books of the Company as they
are issued ownership of shares shall be recorded in book-entry form unless
shareholders request to hold certificated shares.

6.02. Lost or Destroyed Certificates. The Board may in its discretion
authorize the issuance of a new certificate or certificates in place of any
certificate or certificates previously issued by the Company alleged to have
been lost, stolen or destroyed. As a condition of such issuance, the Board may
require, either generally or in each case, the record holder of such
certificates, or his legal representative, to furnish an affidavit setting out
the facts of such alleged loss, theft or destruction, and a bond with such
surety and in such form and amount as the Board may specify, indemnifying the
Company, any transfer agent and registrar against any claim against any of them
relating to such lost, stolen or destroyed certificates.

6.03. Transfer of Shares. The following provisions shall apply to transfers
of shares:

(a) Upon surrender to the Company or the transfer agent of the Company of
a certificate for shares or other securities of the Company duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, the Company shall issue a new certificate to the person entitled
to such certificate, and cancel the old certificate, except to the extent
the Company or such transfer agent may be prevented from doing so by law,
by the order or process of any court of competent jurisdiction, or under
valid restriction on transfer imposed by these Bylaws or agreement of
security holders. Every such transfer shall be entered upon the transfer
books of the Company.

(b) The Company shall be entitled to treat the holder of record of any
share or other security of the Company as the holder in fact of such
security and shall not be bound to recognize any equitable or other claim
to or interest in such security on the part of any other person whether or
not it shall have express or other notice of such claim, except as
expressly provided by law.

BYLAW 7
DISTRIBUTIONS

7.01. Distributions Authorized. The Board may authorize and the Company may
make distributions to the shareholders.

7.02. Record Date, Declaration Date and Payment Date. The Board may fix a
record date, declaration date and payment date with respect to any distribution
to shareholders. If the Board does not fix the record date for determining
shareholders entitled to a distribution (other than one involving repurchase or
reacquisition of shares), it is the date the Board authorizes the distribution.

7.03. Prohibited Distributions. A distribution may not be made if, after
giving it effect, the Company would not be able to pay its debts as they become
due in the usual course of business.

7.04. Basis for Determination that Distribution Not Prohibited. The Board
may base a determination that a distribution is not prohibited by Bylaw 7.03
either on financial statements prepared on the basis of accounting practices and
principles that are reasonable in the circumstances or on a fair valuation or
other method that is reasonable in the circumstances.

7.05. Measuring Effect of Distribution; Date. The effect of a distribution
under Bylaw 7.03. is measured:

(a) In the case of distribution by purchase, redemption, or other
acquisition of the Company's shares, as of the earlier of:

(i) The date money or other property is transferred or debt incurred
by the Company; or

(ii) The date the shareholder ceases to be a shareholder with respect
to the acquired shares;

(b) In the case of any other distribution or indebtedness, as of the date
the indebtedness is distributed; and

(i) The date the distribution is authorized if the payment occurs
more than 120 days after the date of authorization; or

(ii) The date the payment is made if it occurs more than 120 days
after the date of authorization.

7.06. Indebtedness to Shareholder; Priority. The Company's indebtedness to
a shareholder incurred by reason of a distribution made in accordance with this
Bylaw 7 is at parity with the Company's indebtedness to its general, unsecured
creditors except to the extent subordinated by agreement.

7.07. Distribution In-Kind. Distributions in-kind shall not be permitted,
except for:

(a) Distributions of readily marketable securities;

(b) Distributions of beneficial interests in a liquidating trust
established for the dissolution of the dissolution of the Company and the
liquidation of its assets in accordance with these Bylaws; or

(i) The Directors advise each shareholder of the risks associated
with direct ownership of the property;

(ii) The Directors offer each shareholder the election of receiving
in-kind property distributions; and

(iii) The Directors distribute in-kind property only to those
shareholders who accept the Directors' offer.

7.08. Distribution Reinvestment Plan. The Board may adopt a distribution
reinvestment plan which shall, at the minimum, provide for the following:

(a) All material information regarding the distribution to the shareholder
and the effect of reinvesting such distribution, including the tax
consequences, shall be provided to the shareholder at lease annually; and

(b) Each shareholder participating in the plan shall have a reasonable
opportunity to withdraw from the plan at least annually after receipt of
the information set out in Bylaw 7.08(a)

BYLAW 8
INVESTMENT POLICIES

8.01. Prohibited Transactions. The Company shall not:

(a) Invest more than 10% of its total assets in Unimproved Real Property
or mortgage loans on Unimproved Real Property;

(b) Invest in commodities or commodity future contracts, other than
futures contracts, when used solely for hedging purposes in connection with
the Company's ordinary business;

(d) Issue debt securities unless the historical debt service coverage (in
the most recently completed fiscal year) as adjusted for known changes is
sufficient to properly service that

higher level of debt;

(e) Issue options or warrants to purchase its shares to the Advisor,
Directors, Sponsor or any Affiliate of such Persons except on the same
terms as such options or warrants are sold to the general public. The
Company may issue options or warrants to persons not so connected with the
Company but not at exercise prices less than the fair market value of such
securities on the date of grant and for consideration (which may include
services) that in the judgment of the Independent Directors, has a market
value less than the value of such option on the date of grant. Options or
warrants issueable to the Advisor, Directors or any Affiliate of such
persons shall not exceed an amount equal to 10% of the outstanding shares
of the Company on the date of grant of any options or warrants;

(f) Issue shares on a deferred payment basis or other similar arrangement;

(g) Allow the aggregate borrowings of the Company to exceed 300% of the
Net Assets of the Company, unless a majority of the Independent Directors
that a higher level of borrowing is appropriate;

(h) Purchase property from any Management Company, a director or Affiliate
of such a Management Company, or, if the price to the Company is in excess
of such cost, that substantial justification for such excess exists and
such excess is not unreasonable. In no event shall the cost of such asset
to the Company exceed its current appraised value;

(i) Sell or lease property to a Management Company, a director or
Affiliate of a Management Company, unless a majority of the Directors,
including a majority of the Independent Directors, not otherwise interested
in such transaction approve the transaction as being fair and reasonable to
the Company, a Management Company, a Director, or any Affiliate of a
Management Company or a Director less than its current apprised value.

(j) Make loans to or borrow from a Management Company, a Director or an
Affiliate of a Director or a Management Company, unless a majority of the
Directors, including a majority of the Independent Directors, not otherwise
interested in such transaction approve the transaction as being fair,
competitive and commercially reasonable and no less favorable to the
Company than loans between unaffiliated lenders and borrowers under the
same circumstances.

(k) Invest in any joint ventures with the Sponsor, Advisor, Director or
any Affiliate of such Person, unless a majority of Directors (including a
majority of Directors) not otherwise interested in such transactions as
being fair and reasonable to the Company and on substantially the same
terms and conditions as those received by other venturers.

(l) Invest in equity securities unless a majority of Independent
Directors, not otherwise interested in the transaction as being fair,
competitive and commercially reasonable.

(m) Act in any way that would disqualify the Company as a real estate
investment trust under the Internal Revenue Code of 1986, as amended.

(n) Invest in or make mortgage loans unless an appraisal is obtained
concerning the underlying property except for those loans insured or
guaranteed by a government or government agency. In cases in which a
majority of the Independent Directors so determine, and in all cases in
which the transaction is with the Advisor, Directors, Sponsor or Affiliates
of such Persons, such an appraisal must be obtained from an Independent
Expert concerning the underlying property. This appraisal shall be
maintained in the Company's records for at least five years, and shall be
available for inspection and duplication by any shareholder. In addition to
the appraisal, a mortgagee's or owner's title insurance policy or
commitment as to the priority of the mortgage or the condition of the title
must be obtained. Further the Advisor and Directors shall observe the
following policies in connection with investing or making mortgage loans:

(i) The Company shall not invest in real estate contracts of sale,
otherwise known as land sale contracts, unless such contracts of sale
are in recordable form and appropriately recorded in the chain of
title.

(ii) The Company shall not make or invest in mortgage loans,
including construction loans, on any one property if the aggregate
amount of all mortgage loans outstanding on the property, including
the loans of the Company, would exceed an amount equal to 85% of the
appraised value of the property as determined by appraisal unless
substantial justification exists because of the presence of other
underwriting criteria. For purposes of this the "aggregate amount of
all mortgage loans outstanding on the property including the loans of
the Company," shall include all interest (excluding contingent
participation in income and/or appreciation in value of the mortgaged
property), the current payment of which may be deferred interest on
each loan exceeds 5% per annum of the principal balance of the loan.

(iii) The Company shall not make or invest in any mortgage loans that
are subordinate to any mortgage or equity interest of the Advisor,
Trustees, Sponsors or any Affiliate of the Company.

(o) Engage in the business of investing, reinvesting, owning, holding or
trading in securities, or own Investment Securities having a value
exceeding 40 percent of the value of the Company's total assets (exclusive
of Government securities and cash equivalents) on an unconsolidated basis.

(p) Invest more than 25% of the Company's total assets in securities other
than Government Securities and cash equivalents.

8.02. Sales and Leases to the Company. The Company shall not purchase
property from a Sponsor, Advisor, Director or any Affiliate of such a person,
unless a majority of Directors (including Independent Directors) not otherwise
interested in such transaction approve the transaction as being fair and
reasonable to the Company and at a price to the Company no greater than the cost
of the asset to such Sponsor, Advisor, Director or by Affiliate of such person,
or if the price to the Company is in excess of such cost, that substantial
justification for such excess exists

and such excess is reasonable. In no event shall the cost of such asset to the
Company exceed its current appraised value.

8.03. Sales and Leases to the Sponsor, the Advisor, the Directors or any
Affiliate. Sales and leases to the Sponsor, the Advisor, the Trustees or any
Affiliate shall be conducted as follows: -

(a) A Sponsor, Advisor, Director or any Affiliate of such a person shall
not acquire assets from the Company unless approved by a majority of the
Independent Directors, not otherwise interested in such transaction, as
being fair and reasonable to the Company.

(b) The Company may lease assets to a Sponsor, Advisor, Director or any
Affiliate of such person only if approved by a majority of Directors
(including a majority of Independent Directors) not otherwise interested in
such transaction, as being fair and reasonable to the Company.

8.04. Loans. Loans shall be transacted as follows:

(a) No loans may be made by the Company to a Sponsor, Advisor, Director or
any Affiliate of such a person except as provided under Bylaw 8.01(n) or to
wholly owned subsidiaries of the Company.

(b) The Company may lease assets to a Sponsor, Advisor, Trustee or any
Affiliate of such a person, unless a majority of Directors (including a
majority of Independent Directors), not otherwise interested in such
transaction approve the transaction as being fair, competitive and
commercially reasonable and no less favorable to the Company than loans
between unaffiliated parties under the same circumstances.

8.05. Other Transactions. All other transactions between the Company, the
Sponsor, the Advisor, any Director or any Affiliate shall require approval by a
majority of the Directors (including a majority of Independent Directors) not
otherwise interested in such transactions as being fair and reasonable to the
Company and on terms and conditions not less favorable to the Company than those
available from unaffiliated third parties.

8.06. Conflicts of Interest. All other transactions between the Company and
a Management Company, or a Director or affiliate of a Management Company shall
require approval by a majority of the Directors (including a majority of
Independent Directors) not otherwise interested in such transactions as being
fair and reasonable to the Company than those available from unaffiliated third
parties.

8.07. Short-Term Investments. To the extent that the following investments
are not inconsistent with the Company's status as a real estate investment trust
under the Internal Revenue Code of 1986, as amended, the Company may prior to
acquisition of properties, between the time of receipt of revenues and payment
of distributions to shareholders, and at such other times as the officers of the
Company determine are necessary or desirable to the efficient management of the
Company, invest its cash in certain short-term investments including:
interest-bearing bank accounts, certificates of deposits, short-term
money-market securities, short-term United States

government securities, mortgaged-backed securities guaranteed by the Government
National Mortgage Association, mortgages insured by the Federal Housing
Administration or guaranteed by the Veterans Administration, mortgage loans or
mortgage loan participations. Other short-term investments shall be subject to
prior approval by the Board.

8.08. Amendment. The investment policies set out in Bylaws 8.01 and 8.03
may be altered, amended or repealed only with the consent of a majority of the
shareholders.

8.09. Actions by the Independent Directors of the Company. A majority of
the Independent Directors shall determine at least annually that the
compensation the Company contracts to pay for management services is reasonable
in relation to the nature and quality of services performed and that such
compensation is within the limits prescribed in any agreement between the
Company and any Management Company. Such determination shall be based upon such
factors as the independent directors deem appropriate, including the size of the
fee in relation to the size, composition and profitability of the Company's real
property interests under management, the rates charged to other real estate
investment trusts, as such term is defined under the Internal Revenue Code of
1986, as amended (a "REIT"), and to investors other than REITs by firms
performing similar services, the amount of additional revenues realized by such
firm and its affiliates for other services performed for the Company, the
quality and extent of services furnished by the Management Company, the
performance of the Company's properties under management (including income,
conservation and appreciation of capital) and the quality of those properties.

8.10. Minimum Capital. The Sponsor shall contribute minimum capital to the
Company as follows:

(a) Prior to the Company's initial public offering of its shares, the
Sponsor, or any Affiliate, shall contribute to the Company an amount not
less than the lesser of:

(i) 10% of the total net assets upon completion of the offering; or

(ii) $200,000 as an Initial Investment.

(b) The Sponsor or any Affiliate may not sell this Initial Investment
while the Sponsor remains a Sponsor but may transfer the shares to other
Affiliates.

8.11. Appraisal of Real Property. The consideration for real property
acquired by the Company shall ordinarily be based on the fair market value of
the property as determined by a majority of the Directors. In cases in which a
majority of the Independent Directors so determine, and in all cases in which
assets are acquired from the Advisor, the Directors, the Sponsor or Affiliates,
such fair market value shall be as determined by an Independent Expert selected
by the Independent Directors.

BYLAW 9
FEES, COMPENSATION AND EXPENSES

9.01. Acquisition Fees and Acquisition Expenses. Acquisition Fees and
Acquisition

Expenses shall be limited as follows:

(a) The total of all Acquisition Fees and Acquisition Expenses shall be
reasonable, and shall not exceed an amount equal to 6% of the contract
price of the property, or in the case of a mortgage loan, 6% of the funds
advanced.

(b) Notwithstanding Bylaw 9.01(a), a majority of the Directors (including
a majority of the Independent Directors) not otherwise interested in the
transaction may approve fees in excess of these limits if they determine
the transaction to be commercially competitive, fair and reasonable to the
Company.

9.02. Total Operating Expenses. Total Operating Expenses shall be limited
as follows:

(a) The Total Operating Expenses of the Company shall be reasonable, and
shall not exceed in any fiscal year the greater of 2% of its Average
Invested Assets or 25% of its Net Income for such year. The Independent
Trustees shall have the fiduciary responsibility of limiting such expenses
unless such Independent Directors shall have made a finding that, based on
such unusual and non-recurring factors which they deem sufficient, a higher
level of expenses is justified for such year. Any such finding and the
reasons in support of such finding shall be reflected in the minutes of the
meeting of the Directors.

(b) Within 60 days after the end of any fiscal quarter of the Company for
which Total Operating Expenses (for the twelve [12] months then ended)
exceed 2% of Average Invested Assets or 25% of Net Income, whichever is
greater, there shall be sent to the shareholders of the Company a written
disclosure of such fact, together with an explanation of the factors the
Independent Directors considered in arriving at the conclusion that such
higher operating expenses were justified and disclosure is made to
shareholders in the next quarterly report of the Company, along with
justification of such excess.

(c) In the event the Independent Directors do not determine such excess
expenses are justified, the Advisor shall reimburse the Company at the end
of the twelve month period the amount by which the aggregate annual
expenses paid or incurred by the Company exceed the limitations set out in
this Bylaw 9.02.

9.03. Real Estate Commissions on Resale of Property. If an Advisor,
Director, Sponsor or any Affiliate provides a substantial amount of the services
in the effort to sell the property of the Company, then that Person may receive
up to one-half of the brokerage paid but in no event to exceed an amount equal
to 3% of the contracted for sales price. In addition, the amount paid when added
to the sums paid to unaffiliated parties in such a capacity shall not exceed the
lesser of the Competitive Real Estate Commission or an amount equal to 6% of the
contracted for sales price.

9.04. Incentive Fees. An interest in the gain from the sale of assets of
the Company, for which full consideration is not paid in cash or property of
equivalent value, shall be allowed provided the amount or percentage of such
interest is reasonable. Such an interest in gain from the sale of Company assets
shall be considered presumptively reasonable if it does not exceed 15% of the
balance of such net proceeds remaining after payment to shareholders, in the
aggregate, of an

amount equal to 100% of the original issue price of the shares per year
cumulative. For purposes of this Bylaw 9.04, the original issue price of the
shares may be reduced by prior cash distributions to shareholders of net
proceeds from the sale of Company assets.

9.05. Organization and Offering Expenses. The Organization and Offering
Expenses paid in connection with the Company's formation shall be reasonable,
and shall in no event exceed an amount equal to 15% of proceeds raised in the
initial public offering of the Company.

BYLAW 10
OWNERSHIP AND TRANSFER LIMITATIONS

10.01. Transferability, Transfer Restrictions and Ownership Limitations.
Shares shall be transferable. The Persons in whose names are entered on the
books of the Company shall be deemed the absolute owners of such shares and,
until a Transfer is effected on the books of the Company, the Board shall not be
affected by any notice, actual or constructive, of any Transfer. Any issuance,
redemption or Transfer of shares which would operate to disqualify the Company
as a real estate investment trust under the Code shall be null and void from the
beginning.

10.02. Ownership Limitation. The following ownership limitation shall apply
to shares:

(a) No Person or Persons acting as a group shall Beneficially Own shares
in excess of the Ownership Limit.

(b) Except as provided in Bylaw 10.07, any Transfer of shares which, if
effective, would result in any Person Beneficially Owning shares in excess
of the Ownership Limit shall be void from the beginning as to the transfer
of the shares which would be Beneficially Owned by such Person in excess of
the Ownership Limit; the intended Transferee shall acquire no rights in
such shares.

(c) Except as provided in Bylaw 10.09, any Transfer which, if effective,
would result in the shares being beneficially owned by fewer than 100
Persons and which would cause the Company to violate the requirement set
out in Section 856(a)(5) of the Code shall be void from the beginning as to
the Transfer of shares which would be otherwise Beneficially Owned by the
Transferee; the intended Transferee shall acquire no rights in such shares.

(d) Except as provided in Bylaw 10.09, any Transfer which, if effective,
would result in the Company being "closely held" within the meaning of
Section 856(h) of the Code shall be void from the beginning as to the
Transfer of the shares which would cause the Company to be "closely held"
within the meaning of Section 856(h) of the Code; the intended transfer
shall acquire no rights in such shares.

(e) Any Transfer which, if effective, would result in the disqualification
of the Company as a real estate investment trust by virtue of actual,
Beneficial or constructive ownership of shares shall be void from the
beginning as to such portion of the Transfer resulting in such potential
disqualification; the intended Transferee shall acquire no rights in such
shares.

10.03. Prevention of Transfer. If the Board or its designee shall at any
time determine in good faith that a Transfer has taken place in violation of
Bylaw 10.02, or that a Person intends to acquire or has attempted to acquire
Beneficial Ownership of Bylaw 10.02, the Board or its designee shall take such
action as it deems advisable to refuse to give effect to or prevent such
Transfer, including, but not limited to, refusing to give effect to such
transfer on the books of the Company or instituting proceedings to enjoin such
Transfer.

10.04. Notice to Company. Any Person who acquires or attempts to acquire
shares in violation of Bylaw 10.02, shall immediately give written notice or,
with respect to a proposed or attempted Transfer, give at least 30 days' prior
written notice to the Company of such event and shall provide to the Company
such other information as the Company may request in order to determine the
effect, if any, of such Transfer or attempted Transfer on the Company's status
as a real estate investment trust.

10.05. Information to be Provided to Company. Certain Beneficial Owners
shall provide information to the Company as follows:

(a) Every Beneficial Owner of more than 5% (or such other percentage,
between 0.5% and 5%, as provided in the regulations promulgated pursuant to
the Code) of the number or value of issued and outstanding shares shall by
January 31 of each year, give written notice to the Company stating the
name and address of such Beneficial Owner, the number of shares held by
such owner and a description of how such shares are held; each such
Beneficial Owner shall provide to the Company such additional information
as the Company may reasonably request in order to determine the effect, if
any, of such Beneficial Ownership on the Company's qualification as a real
estate investment trust under the Code; and

(b) Each Beneficial Owner and each Person (including the shareholder of
record) who is holding shares for a Beneficial Owner shall provide to the
Company in writing such information with respect to direct, indirect and
constructive ownership of shares as the Board deems reasonably necessary to
comply with the provisions of the Code applicable to real estate investment
trusts, to determine the Company's status as a real estate investment
trust, to comply with the requirements of any taxing authority or
governmental agency or to determine such compliance.

10.06. Other Actions by the Board. Subject to Bylaw 10.02, nothing in this
Article 10 shall limit the authority of the Board to take such other action as
it deems necessary or advisable to protect the Company and the interests of its
shareholders by preservation of the Company's qualification as a real estate
investment trust.

10.07. Change in Ownership Limit. Subject to the limitations set out in
Bylaw 10.08, the Board may from time to time change the Ownership Limit,
provided that any decrease may only be made prospectively as to subsequent
shareholders (other than a decrease as a result of a retroactive change in
existing law which would require a decrease in order for the Company to qualify
as a real estate investment trust, in which case such a decrease would be
effective immediately).

10.08. Limitations on Changes in Ownership Limit. Changes in Ownership
Limit shall be limited by the following:

(a) The Ownership Limit may not be increased if, after giving effect to
such increase, five individual Beneficial Owners of shares could
Beneficially Own, in the aggregate, more than 49.9% of the issued and
outstanding shares of the Company.

(b) Prior to the modification of any Ownership Limit pursuant to Bylaw
10.07, the Board may require such opinions of counsel, affidavits,
undertakings or agreements as it may deem necessary or advisable with
regard to the Company's qualification as a real estate investment trust.

10.09. Waiver by the Board. The Board, upon receipt of a ruling from the
Internal Revenue Service or an opinion of counsel to the effect that such
exemption will not result in the Company being "closely held" within the meaning
of Section 856(h) of the Code or such other evidence as the Board deems
necessary in its sole discretion, a Person from the Ownership Limit, if the
Board obtains such representations and undertakings from such Person as the
Board deems appropriate.

10.10. Restrictive Legend. Each certificate for shares shall bear the
following legend:

The shares represented by this certificate are subject to restrictions on
ownership and transfer for purposes, among others, of Alanar Real Estate
Investment Trust Series 1 Corporation's qualification as a real estate
investment trust under the Internal Revenue Code. Except as provided
otherwise in the corporation's bylaws, no person may own more than 9.8% of
the issued and outstanding shares of the corporation.

BYLAW 11
MISCELLANEOUS

11.01. Execution of Instruments. All corporate instruments and documents
shall be signed or countersigned, executed, verified or acknowledged by a proper
officer or officers or such other person or persons as the Board may from time
to time designate.

11.02. Fiscal Year. The fiscal year of the Company shall be the calendar
year.

11.03. Amendments. These Bylaws may be altered, amended or repealed from
time to time by the shareholders or, except as provided in Bylaw 8, by the Board
without assent of the shareholders.